Does Citizens’ Financial Literacy Relate to Bank Financial Reporting Transparency?

In this study, we examine the relationship between financial literacy and bank reporting transparency for a sample of banks from U.S. Following prior literature, employ discretionary loan loss provisions (DLLP) as our primary measure transparency. We argue that their customers can influence managers’ behaviors with respect to both mechanics provisioning opportunistic actions. Financially literate represent more stable sources funding have predictable contributes persistent earnings. Financial could also enhance customers’ ability indirectly follow monitor performance risk-taking. Therefore, managers will be less likely engage in earnings manipulation. these arguments, predict citizens’ is positively associated Consistent prediction, find magnitude DLLP negatively related state-level literacy. Moreover, association higher retail deposits larger consumer loans, two channels through which